EUR/JPY pushes lower as recession fears set in

The headlines regarding worries of a recession have been coming in fast and furious. The worse than expected PMI headlines 2 weeks ago out of Europe and the US were finalized this week. The European S&P Global Manufacturing PMI Final for June was 52.1 vs 54.6 in May. This was the lowest level since August 2020. The ISM Manufacturing PMI for June was 53 vs 56.1 in May. This was the lowest level since June 2020. Although the US manufacturing data was just as bad as in Europe, traders have been flocking to the US Dollar as a safe haven currency. As a result, EUR/USD has fallen below 102 and appears that it could be on its way to parity.

However, the US Dollar isn’t the only currency that traders are moving to for safety. The Yen is also considered a safe haven. As a result of a weak Euro and a strong Yen, EUR/JPY has been taking a hit over the last few days. Since February 2020, EUR/JPY had been moving higher in an upward sloping channel. The pair made its 2022 low on March 7^th at 123.39 and moved higher until June 28^th, creating a triple top near 144.27. This is EUR/JPY’s highest level since January 2015. On June 28^th, the EUR/JPY began moving lower, and just 1 week later on July 5^th, the pair broken below the bottom trendline of the longer-term, upward sloping channel near 139.50. Today, EUR/JPY continues lower and has broken the neckline of the triple top near 137.70. The target for the break of the neckline of a triple top is the height from the top to the neckline, added to the breakdown level. In this case the target is near 131.10.

Source: Tradingview, Stone X

On a 240-minute timeframe, there is a confluence of support just below previous resistance and the 38.2% Fibonacci retracement level from the lows of March 7^th to the highs from June 28^th between 136.68 and 136.80. Below there, EUR/JPY could fall to the 50 % retracement level from the same timeframe near 134.33, then the lows of May 12^th at 132.65. However, if EUR/JPY bounces, first resistance is at today’s high and the bottom trendline of the channel near 139.50. Above there, the pair can trade to the July 5^th highs at 142.37, then the highs from June 28^th at 144.28.

Source: Tradingview, Stone X

If general fears of a recession continue, it may put more pressure on the Euro. In addition to EUR/USD moving lower, EUR/JPY could continue lower as well, as the Yen is also considered a safe haven currency.

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.